CRUX:
Mkvn Murthy vs Associated Broadcasting Company CRIMINAL PETITION Nos.6450 OF 2019 & 6121 OF 2020-In the present case, accused Nos. 1 and 2 in Crime No. 900 of 2019 pending on the file of Banjara Hills Police Station, Hyderabad, filed Criminal Petition, under Section 482 of the Criminal Procedure Code to quash the proceedings in the said Crime against them. They are accused of violating IPC Sections 418, 420, and 409.
DATE OF JUDGMENT:
01/06/2021
JUDGE:
Hon’ble Mr. Justice K. Lakshman
PARTIES:
Mkvn Murthy(Petitioner)
Associated Broadcasting Company(Respondent)
SUMMARY
In the present case, accused Nos. 1 and 2 in Crime No. 900 of 2019 pending on the file of Banjara Hills Police Station, Hyderabad, filed Criminal Petition, under Section 482 of the Criminal Procedure Code to quash the proceedings in the said Crime against them. They are accused of violating IPC Sections 418, 420, and 409.
Brief
Accused Nos. 1 and 2 in Crime No. 900 of 2019 pending on the file of Banjara Hills Police Station, Hyderabad, filed Crl.P.Nos. 6450 of 2019 and 6121 of 2020, respectively, under Section 482 of the Criminal Procedure Code to quash the proceedings in the said Crime against them. They are accused of violating IPC Sections 418, 420, and 409.
Background Facts
As of August 27, 2018, M/s.Alanda Media & Entertainment Pvt. Limited (AMEPL) had acquired a majority shareholding (ownership) in ABCPL, accounting for 90.54 percent of the entire equity share capital, making it the company's largest shareholder.
The petitioners/A-1 and A-2 fraudulently drew significant sums and also paid to Mr.Clifford Pereira by misusing the authority and signing the instruments, according to the new Board of Directors' inspection of records and account statements from June, 2019. The withdrawals of the aforementioned amounts are expressly indicated in the complaint dated 04.10.2019 in the tabular form as 2 KL, J Crl.P.Nos.6450 2019 & 6121 2020.
Both petitioners issued remittance cheques/instruments knowing full well that they were not entitled to such large sums and that they had no jurisdiction to pay for themselves without the consent of the shareholders/Directors.
The petitioners were the Directors and Authorized Signatories to the bank accounts as of the date of drawal of the said sums mentioned in the tabular form, and by misusing their cheque power, which is supposed to be used for the company's benefit, have fraudulently drawn the amounts and also issued the amounts to Mr.Clifford Pereira, misappropriating the company's funds.
The petitioners were Whole Time Directors of ABCPL, and they were entrusted with domain over the company's money, as well as authorised signatories to manage the company's bank accounts in their capacity as Whole Time Directors. As such, they were the company's agents and Trustees, and they were supposed to act in the best interests of the company, its shareholders, and other stakeholders when it came to the business's funds.
The petitioners, as the company's agents, have used the money for their personal purposes by issuing checks from the company's account in their names as authorised signatories, completely disregarding the faith placed in them by the shareholders.
The funds were moved with the aim to defraud the petitioners and cause wrongful loss to the 3 KL, J Crl.P.Nos.6450 2019 & 6121 2020 company. Later, as an afterthought, it was coloured as bonus/ex gratia with antedated paperwork without passing a legitimate board resolution to pay such amounts, which could not be passed anyway because all of the above are parties to the board resolution.
As a result, the petitioners defrauded the corporation and its owners. The amount misappropriated by the petitioners is nearly equal to the company's profits for two financial years, 2017-18.
The petitioners, as the company's Whole-Time Directors, are expected to protect the company's and its shareholders' interests. Instead, they have taken advantage of their position and defrauded the company, resulting in wrongful loss to the firm and consequential unjust gain to the petitioners.
The petitioners encouraged the accounts team to record the stated amounts on account of bonus/ex gratia to them without holding an appropriate board meeting or seeking approval at the company's general meeting of shareholders, according to Respondent No.2. As a result, the funds in question are considered illegal and unjust withdrawals from the company.
The company's Directors held a lengthy discussion concerning the fraudulent removal of funds on September 24, 2019, and agreed to file complaints and commence necessary legal processes against the petitioners to recover the funds.
Respondent No.2, a Whole Time Director of ABCPL, filed a complaint with the Police, Banjara Hills Police Station, Hyderabad, on 04.10.2019, alleging the aforementioned offences. The police thereafter filed a case in Crime No.900 of 2019 against the petitioners.
Petitioner Counsel’s Submissions
The petitioners do not need the Board of Directors of ABCPL's approval in order to make the payment, according to knowledgeable Senior Counsel. The petitioners, who are also the company's Whole-Time Directors and Authorized Signatories, have drawn the amounts specified in the complaint and paid them to the officers, employees, and others as bonuses or ex gratia. As a result, the petitioners did not commit 5 KL, J Crl.P.Nos.6450 2019 & 6121 2020 cheating or criminal breach of trust, as claimed in the 04.10.2019 complaint.
He further claims that ABCPL has been providing bonuses and ex gratia to its staff for numerous years and that this practise is still being followed. As a result, the petitioners, who are the company's Full-Time Directors, withdrew the money and paid it to the workers. He would further contend that respondent No. 2 was appointed as the company's Whole-Time Director on June 1, 2019, and that he filed the current complaint on October 4, 2019, with the malicious goal of harassing the petitioners by accusing them of the current crime.
He also claims that, despite the fact that the issues and allegations in all five of the aforementioned crimes are nearly identical, the Banjara Hills Police Department has recorded the current crime while the aforementioned crimes are still being investigated. As a result, registering multiple offences is not permitted.
He also contends that, following the withdrawal of the said amount, the petitioners paid bonus/ex gratia to ABCPL employees for the fiscal years 2017-18 and 2018-19, and that, as Whole Time Directors, they are also entitled to the said benefit under Clause No.9 of the company's Memorandum and Articles of Association. Respondent No.2 has a prejudice against the petitioners because of the issues over the aforementioned Share Purchase Agreement dated August 24, 2018, and has implicated them in the current crime.
Respondent Counsel’s Submissions
Sri Duvva Pavan Kumar, learned counsel for respondent No.2, argued that the petitioners were required to obtain board approval under the Memorandum and Articles of Association of ABCPL, but they did not do so, and as a result, they illegally withdrew large sums of money, causing wrongful loss to the company's directors and shareholders and gaining writ of mandamus. The petitioners withdrew the funds under the guise of paying bonuses/ex gratia to ABCPL workers, and in the process, they produced antedated documents without adopting a formal board resolution authorising distribution of the funds. The sum misappropriated by the petitioners is nearly equal to two years' worth of revenues. This is nothing more than them fraudulently drawing the funds by misusing their rights as Whole Time Directors and also signing the checks.
He also claims that Mr.Clifford Pereira sent a letter to the Board of Directors of ABCPL on September 24, 2019, indicating that he received an amount net of tax deducted at source in the sum of Rs.3,83,35,744/- through RTGS to his bank account on various dates. Upon further inquiry, both petitioners informed him that the funds had been applied to other benefits to which he is entitled. It is also said that items relating to the release of funds in the name of bonus or elsewhere have not been placed or addressed in ABCPL's board meetings, and he has not attended any of them. He has not received any notice, agenda, bonus calculations, or other information on the above-mentioned transfers. He assumed that the petitioners had complied with the law and followed the appropriate procedure because the aforementioned amounts were given to them and recorded as bonuses in the books of accounts.
Following that, he discovered that the petitioners had carried out all of the aforementioned actions without obtaining legal approvals. The net payment/drawal of Rs.11,74,51,808/- after Tax Deducted at Source was addressed in detail at ABCPL's board meeting on September 24, 2019, and the board agreed to take legal action against the petitioners to recover the money, including filing criminal complaints.
Furthermore, accused No.1 has filed a company petition, C.P.No.310 of 2019, with the National Company Law Tribunal, and no interim orders have been issued. In the complaint dated 14.10.2019, there are specific claims against the petitioners, and the offence is still under investigation.
The Investigating Officer needs to go into various factual issues, therefore the proceedings in Crime No.900 of 2019 cannot be annulled by this Court in the exercise of its powers under Section 482 of the Cr.P.C. He would further argue that both petitioners are already on bail, and that this Court has granted them protection from arrest.
He also argued that the complaints and claims in each of the aforementioned five offences are distinct. A review of the complaints would uncover the aforementioned truth. As a result, the petitioners' argument that multiple offences can be registered in connection with the same subject by the same parties is unsustainable. With these statements, he hoped to have both Criminal Petitions dismissed.
Court’s Observation and Decision
Because the complaints and allegations in each case differ, Sri T.Pradyumna Kumar Reddy, learned Senior Counsel appearing for the petitioners, claims that the Police, Banjara Hills Police Station, registered the current crime, Crime No.900 of 2019, during the pendency of the above-mentioned four crimes, and thus registration of multiple crimes is impressible, is unfounded. Thus, the current processes in Crime No.900 of 2019 cannot be invalidated from any perspective.
This Court, by order dated 12.07.2019 in Crl.P.Nos.2743, 2747, and 2748 of 2019, granted anticipatory bail to accused No.1 on certain conditions in Crime Nos.439, 84, and 87 of 2019, and directed the Investigating Officer in Crime No.900 of 2019 not to arrest accused No.2 in the said crime by order dated 08.03.2021 in Crl.P.No.6121 of 2020. It is stated, however, that the probe may continue. It's also worth noting that, in a petition submitted by accused No.1, this Court, in an order dated 16.10.2019, asked the Investigating Officer not to proceed with the investigation in Crime No.900 of 2019 until 04.10.2019. The above-mentioned order has been extended.
The Investigating Officer in Crime No.900 of 2019 pending on the file of Banjara Hills Police Station, Hyderabad, is directed to scrupulously follow the procedure provided out under Section 41-A of the Cr.P.C. and the guidelines issued by the Hon'ble Apex Court in this Criminal Petition. It was said that the petitioners must comply with the Investigating Officer by providing the information and documents requested by him in order for the investigation to be completed. If there are any pending petitions, they will be closed.
Conclusion
In the present case, the Investigating Officeris directed to scrupulously follow the procedure provided out under Section 41-A of the Cr.P.C. and the guidelines issued by the Hon'ble Apex Court in this Criminal Petition. It was said that the petitioners must comply with the Investigating Officer by providing the information and documents requested by him in order for the investigation to be completed. If there are any pending petitions, they will be closed.
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